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SHELBY TOWNSHIP — The U.S. Attorney’s Office for the Eastern District of Michigan released information in December indicating that two Michigan suspects, including one from Shelby Township, filed a total of 470 unemployment claims in five different states, stealing $4 million. taxpayer dollar dollars intended to go to those who have lost their jobs due to COVID-19.
Tauheed Wilder, 39, of Detroit, and Shuqueni Franklin, 30, of Shelby Township, are charged in separate complaints with mail fraud, wire fraud, aggravated identity theft and money laundering.
According to the U.S. Attorney’s Office, Wilder and Franklin filed numerous false statements using their own names and fake Social Security numbers. The U.S. Attorney’s Office alleges that Wilder and Franklin also used other people’s stolen identities to file false claims for unemployment insurance benefits. Banking oversight recorded Wilder and Franklin using ATM cards in the names of individuals whose identities they had stolen to withdraw illegally obtained unemployment benefits, the U.S. attorney’s office said.
Lawyers for Wilder and Franklin could not be reached. Preliminary examinations in U.S. District Court for Wilder and Franklin are scheduled for February 11.
Improvements can stop unemployment fraud
An online fraud expert has explained how the state needs to do better technologically to prevent fraud cases like these.
Haywood Talcove is the CEO of LexisNexis Risk Solutions, Government Group, which provides fraud prevention tools to state unemployment programs in addition to the 50 largest banks in the United States.
Talcove said there were questions about how the most basic fraud prevention technologies were not in place, how the lack of a cloud-based application programming interface in agencies of state allowed this fraud to happen without anyone noticing, and how the vulnerabilities had still not been fixed.
Talcove noted that the Michigan Department of Labor and Economic Opportunity reported seeing a spike in unemployment fraud in January.
“While this may come as a surprise to many – given that the state took steps to protect its (unemployment insurance) program after astronomical fraud was reported at the start of this pandemic – it is not a surprise for me. The systemic issues that allowed criminals to loot billions of taxpayer dollars from the Unemployment Insurance Agency have not been addressed, and that’s not something many people are going to say out loud. But it’s true,” he said in an email interview.
He said that depending on which numbers one chooses to believe, the state has lost between 20% and 30% of all unemployment insurance funds during this pandemic. He said those who defrauded the agency will likely use the funds to launch more elaborate fraud schemes.
“I have to reiterate. It was neither unpredictable nor random. The state’s unemployment insurance program had – and still has – vulnerabilities and flaws that my colleagues and I have been agitating for years, and no one should be surprised that the program was stolen from the blindly,” he said.
Talcove said the cases of Wilder and Franklin illustrate issues that need to be addressed at the state level in terms of technology.
“Let’s take a moment to analyze this case. The only thing that matters is this: it wasn’t sophisticated cybercriminals. They didn’t have deep computer programming and hacking skills, they didn’t use fancy technology to hide their IP addresses so they wouldn’t trigger an alert,” he said.
He said they were allegedly using the same devices, with the same IP addresses, and the state had so few protections in place that Wilder and Franklin could have defrauded the program 470 times for a total of about $4 million. dollars.
“The point is, they’re not the problem. If two petty crooks can steal ($4 million) from a government program, then I’m sorry to say, but it’s the government’s fault. These are our taxpayers’ dollars, and the fraud protections put in place to protect them are an order of magnitude less than any US bank would consider acceptable,” he said.
He said Michigan’s $8.5 billion losses are likely higher than that official estimate — and nationally the number appears to be around $250 billion.
“Everyone from petty hustlers to sophisticated international criminal syndicates (some of which were state-sponsored) took a slice of the spoils,” he said.
He said the two components required for a successful unemployment insurance program are “eligibility determination” and “identity verification” and that the state has huge vulnerabilities with both components.
“For example, use a combination of data validation and device ratings, and you’ll really never hear the story of a major bank losing 20% of all deposits to cybercriminals. A bank, for example , will verify public information about you This means they will confirm data that only you know and then they will perform a device assessment to confirm that you are using a device that is actually associated with you to confirm that you are not not an impostor. This is a (basic) two-part framework for identity verification that each of the 50 largest banks in the United States uses,” he said.
“When it comes to determining eligibility, what Michigan faces is endemic to all states and the federal government, and it’s a much bigger problem than most recognize. Large enterprises have centralized APIs and databases, and they build applications that query those APIs. That’s why when you switch from shopping on Amazon to watching Prime Video, you don’t need to have a separate login and credit card etc. They are two separate applications that are rooted in the same customer database,” he said.
Talcove said when someone who works and pays taxes, for example, tries to file for unemployment insurance benefits, it should be easy to recognize that the person is not eligible.
“It is time to revamp the UIA and the state’s technology infrastructure as a whole, if we are to prevent the great unemployment heist of this pandemic from happening again,” he said.
The state takes action
The Michigan Unemployment Insurance Agency cracks down on fraud through the UIA Management Program, Fraud Response Team, Agencies, U.S. Department of Labor Tiger Team , identity verification, daily review of all claims, law enforcement partnerships and fraud advisors.
The Tiger Team is a collaborative initiative that analyzes challenges at the UIA and recommends resources or processes that address fraud, backlog, equity and systems.
UIA’s management programs analyze claims at the time of filing and certification, detecting irregularities or other suspicious patterns on claims that require further investigation. Rose Zibert, acting regional administrator for the U.S. Department of Labor’s Employment and Training Administration, said state and federal agencies will continue to catch those who decide to commit fraud and will develop new programs to detect fraud attempts.
“We appreciate Michigan State officials for their continued efforts in combating fraud during the administration of the CARES Act and other pandemic programs while managing the largest increase in unemployment insurance claims. Of the history. Through our collaborative efforts, we will continue to reduce the risk of fraud and improve equitable access to these much-needed programs,” she said in a press release.
According to the press release, Michigan is working with the National Association of State Workforce Agencies to track fraud trends.
“Michigan was one of the first states to join NASWA’s Integrity Data Hub, which identifies foreign IP addresses, suspicious email domains, multi-state claims and other indicators of fraud.
“A process is underway to choose a new operating system that will be agile, robust and secure to enable faster response to economic changes and provide more internal control over customer touchpoints. The new system should include the latest technologies and processes to quickly identify fraudulent claims,” the press release reads.
